Crescent Point Energy Corp (CPG.TO) Buy, Sell…

Crescent Point Energy Corp (CPG.TO)

11.72

-0.04 (0.34%)

as of May 14, 2024, 8:00:00 pm Market Open.

802 watching

COMMENT

The company has revamped, but the market hasn't responded. Is it a takeover target? Their payout used to be over 100% and issued more and more equity. That model is gone, and it's now much more sustainable. They have solid assets in the Prairies. When Canada changes governments and foreign capital buys Canadian energy stocks again, then CPG will definitely be a takeover target.

COMMENT

ATH-T is a prior top pick that he sold about a month ago to buy CPG-T (who has been buying back shares on free cash-flow). He has concerns over ATH-T liquidity in the market and he held heavy oil exposure in other bigger names. ATH-T has done well to deleverage their balance sheet.

TOP PICK

He has been critical of them in the past, but it is a new story. The new managment team understands the opportunity when their company trades below book value. They are trading at 26% yield of free cash flow. They should hold production flat, harvest the cash and buy back shares. They have infrastructure and production to monetize and buy back shares. Yield 0.76%. (Analysts’ price target is $7.03)

DON'T BUY

He's researched this a lot. He's disappointed with all its write-offs and he's very negative about this. The market still doesn't like some things on its balance sheet. This isn't ready to return to highs yet--but he'll keep his eye on it.

BUY ON WEAKNESS

Why do they have to sell assets? Debt is 65% debt to equity. Cut the dividend. Want to pay down debt by about 1B. In the doghouse right now. Leadership is a question mark, as well as what's a core asset. It's had a bounce, up about 50%. Fabulous recovery. Stocks will cool off in Q2, but will come back in Q4. Dips are windows to buy. Numbers are cheap based on cash flow, but the problem is the debt. May be of interest if it gets below $4.50.

RISKY

He's owned this in the past and likes the management. He likes the changes they are making. But with a 1% dividend, you're looking at only equity growth. Now is a good entry point, but he wants to see light at the end of the energy tunnel--which he doesn't see first. He has a $7 buy on this as a speculative buy. He likes it.

WAIT

She owns little Canadian oil in general. The past week oil stocks have recovered to reflect WCS prices rise. Some money has flowed back. She hasn't committed more money in this space yet. Wants to see what global oil will do for the balance of 2019.

BUY

It's been in a long downtrend. Since February though it's been upward. He sees anupside target of $6. If it breaks that, then he targets $10. It looks constructive here with possibly higher highs and higher lows.. Though it's not a sector leader, it looks positive.

HOLD

He bought in back in February around $4.

BUY ON WEAKNESS

They had a dividend that got reduced. Income investors sold and sent it down. They have 65% debt. They need to sell about $20k in assets. They are doing an issue of more stock. The stock has retreated since. He owns it and thinks it is cheap. They should have sold their crown jewels to get back on track.

COMMENT

Obviously, it's a tough sector that's fallen at least 50%. CPG should be worth more than what it's trading at. CPG is starting to do a better job and no longer issuing shares. Rather, they're buying back shares. Until this sector takes off, CPG won't make a huge move either. He doesn't think the oil space will change much in the near future.

DON'T BUY

A market darling for a few years. When things went difficult in the oil patch they didn't react fast enough. They are still a big oil producer. There is a lot of uncertainty in that regard. A $100 oil seems to be a far away dream now. Stable but what is the catalyst for this to go higher? He doesn't know.

DON'T BUY

He once owned it. They were good at growing assets and production, but they issued a lot of equity to do this. When oil prices rolled over, CPG got hurt; their debt levels went through the roof and got into a bind. New management is selling assets and cutting the dividend to deal with this problem. It'll be a struggle for them for a while. They have more assets they can sell, but buyers think they can get them cheaper.

SELL

They reduced their dividend down to a penny. Ask yourself where the stock is going next, not where it has come from. It is hard to make a case for a high degree of upside. Their production has been shrinking. See his top picks today for one that can go back up again.

BUY

Their asset write down was meaningless. Their reserves did not change which is what he cares about. They will generate $400M free cashflow. The stock is trading below their blowdown value. They are doing the right thing by slowing down the drilling and buying back stock. Management are doing the right thing.

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Crescent Point Energy Corp (CPG.TO)